In forex trading, a good strategy is the only friend of yours that can direct you towards achieving success. But it can act as your enemy if you have not groomed it wisely. If your strategy has not been developed using expert analysis and in-depth research, then you are certainly going to lose the game.
Here is the list of worst strategies one can make and use:
Scalping strategy that targets lower than 5 pips:
Firstly, you must know what a scalping strategy is? In simple words, it is a small-term strategy that is used to earn small profits in a lesser period.
This strategy may seem profitable to most of the traders. But the big disadvantage hidden behind this concept says the truth. The commissions you have to pay while trading on different deals eliminates the chances to earn the profit. Even though you are making a profit, the payment of commissions will snatch that profit from you and you are now left with nothing but disappointment.
A strategy with several trading pairs:
Many traders, in order to trade more currency pairs, use only one strategy and technique for all the currency pairs. Just like the varying economical conditions, currency price, and other factors among different nations, the right technique to trade different currency pairs also varies. If the same strategy is applied to all of the currency pairs, the results are definitely going to be the opposite of what you have expected.
This is one of the worst strategies in the trading world that is mostly used by gamblers. In this strategy, the traders use the technique of doubling the investment every time the trade happens.
To exemplify, assume that you have $10 in total. You bet with $1 in the first time that will give you $1 in return if you win and deduct $1 if you lose. If you lose three times and every time you lose the bet, you double the bet amount in the next turn, the fourth time if you win, you will cover all the previous losses in one strike. This is purely a luck-based strategy and can end up in loss of all your capital unless you are the luckiest person.
It is definitely essential to step into the forex industry with a foolproof strategy if you want to be successful, otherwise, you are going to end up with a huge loss.